September 2, 2016 Update

A battle for the future is ON!

If you are interested at all in business and/or technology you must pay close attention to the rapidly changing world of automobile transportation.

Self-driving cars!

Transportation as a service via software app (e.g. Uber and Lyft) with automated ride-sharing.

Electric cars.

All three of these big leaps in service, technology, and transportation are happening simultaneously and at a speed of development that is breathtaking. Self-driving cars have the potential to be an enormous game-changer. One of my relatives lived in Houston a city where a car is a necessity for most residents. When my relative became unable to drive, his life changed irrevocably. He could not get to the grocery store without substantial effort. He could no longer go visit friends or get himself to the doctor. He did ok with mass transit (in the form of the local bus service) for a while. But becoming increasingly blind and less certain of his sense of direction, getting to the bus stop became a high-risk activity. It was not long before he had to move into a facility where he could get a ride, didn’t have to worry about groceries, and so on. The loss of independence was dramatic and depressing, at least for him.

Imagine if my relative had a self-driving car. His ability to live a comfortably independent life would have been extended perhaps by several years. With an aging population demographic, this shift to self-driving cars can be a huge upgrade in life for many people.

And this is just one example. Ride-sharing is another dramatic change where the cost of getting from one place to another becomes a cost per mile equation with cost savings over some current solutions enormous. Just in Los Angeles, it cost over $60 to go from the airport to a spot nine miles away. That is a cost per mile of almost $7. The return ride in an Uber Pool car (where the driver can pick up other riders heading in the same direction) cost under $13, or under $1.50. The leaders in this ride-sharing race are touting a $0.54 per mile cost. That happens and I will pay under $5 for a ride that cost me over $60 in a regular taxi cab.

Not only are the potential benefits fascinating, but the myriad of companies involved is too. Software companies like Uber and Google are the leaders while the auto companies try to find a partner to be involved, as well as having their own efforts. Then, you have Tesla which is a sort of hybrid car/software company also in the thick of it.

The amount of money pouring into this space is huge. That’s leading a pace of development that is such where seemingly every month brings another major announcement about a new leap forward.

Should I follow your own re-balancing schedule?

To make sure everyone follows this topic, when we talk about re-balancing, it is in the context of the World ETF Ranking 4-week upgrade cycle. There are a couple of answers to this question, depending on which strategy you implement.

For a Buy and Rebalance investor who remains invested in the World ETF Ranking top 5 regardless of the TimingCube signals, it does not matter when to start, as long as you re-balance faithfully every 4 weeks from your start date. The World ETF Ranking is updated weekly to make sure that you always have the most recent data to get started. The results we show on the “Results” page are for our sample 5-ETF portfolio which was started on December 15, 2000, and is re-balanced every 4 weeks since. Our testing has shown that variations in results from one start date to another are not statistically meaningful.

For the Long Only and Long and Short strategies, the beginning of a cycle is always dictated by the TimingCubeBuysignal. On the Trade Date, the day after the signal is issued, we take positions in the current top 5 of the World ETF Ranking, and then re-balance every 4 weeks from that day on.

Market Update

Stocks continued to consolidate their mid-summer gains this week as the season winds down and broader participation in markets kicks in after Labor Day. Stocks began the week with a +0.5% gain. Financials showed strength still reading the prior Friday’s comments from Fed officials as potentially indicative of a rising probability of near-term rate hikes. Higher rates are perceived to bode well for the banking sector. Tuesday saw further strength in financial shares. However, on this day that effort was offset by weakness elsewhere particularly in the commodity-related area where the impact of a rising U.S. dollar added to oversupply concerns to pressure oil prices. The net effect of the action was a -0.2% move on the day.
Those same themes drove markets Wednesday en route to a similar -0.2% slip. The day ended a flat month of August with some indexes notching their first loss in several months, albeit ever so slight. A poor reading from the ISM Manufacturing Index held stocks down early Thursday. Buying later in the session brought indexes back to break-even, however, as investors awaited Friday’s monthly jobs report for clues as to the likely ramp of Fed interest rate action. The Friday report came in lighter than the prior couple of months and a bit below projections to push the odds of a September interest rate back near zero. This sent sectors higher that are sensitive to lower rates and a weaker U.S. dollar. International markets took off as did interest rate sensitive sectors like real estate and utilities. The +0.4% move on Friday left indexes positive on the week.